Modern law makes currency a creature of the state and ultimately the value of its currency depends on the public’s trust in that state. While some nations are more capable than others at instilling public trust in the stability of their monetary institutions, it is nonetheless impossible for any legal system to make the precommitments necessary to completely isolate the governance of its money supply from political pressure. This proposition is true not only today, where nearly all government institutions manage their money supply in the form of central banking, but also true of past private banking regimes circulating their notes under the shadow of public law. However, Bitcoin represents a potential third currency regime far more resistant to state control, because it is minted in no physical place, operates under encryption, and places a numerical ceiling on the number that can be created. The trust required is not in any government but in the decentralized order of those who verify Bitcoin transactions.

This Article explores the fundamental structure of Bitcoin, first by demystifying it as a technology, and second by showing how its decentralized order contrasts with currency regimes. Unlike governments that use power of law to compel action, Bitcoin relies on a system of built-in incentives to encourage behavior that benefits not only those seeking to use Bitcoin, but also Bitcoin miners — those who voluntarily undertake the task of maintaining the payment network. The qualities of this system may give Bitcoin a long-term advantage over other currencies. As the Bitcoin ecosystem continues to grow, its non-legal order can help it climb the rungs of stability created by distrust in government. Bitcoin is already less volatile than some currencies and is starting to approximate gold in this respect.

The technology underpinning Bitcoin is the next point of innovation in the digital age — the same era that has already seen software create institutional disruption from Amazon, Facebook, and Uber among many others. As Bitcoin gains in popularity it offers a platform for other kinds of technological alternatives to traditional legal regimes, like smart contracts. Bitcoin’s order without currency law will facilitate other forms of order with less law.

This is a propitious time for fundamental examination of Bitcoin. It is close to an all-time high price and yet is at an all-time low in volatility.